OANDA Review 2018
By John Jagerson | January 5, 2018
One of the most experienced FX dealers, OANDA's service focuses on individual spot forex and CFD traders around the globe.
Overall Rating
OANDA is well known to experienced traders in the forex market. The firm has began offering individual investors access to spot forex and CFDs since 1996. While its standard trading platforms and below average trading costs are attractive, the company tries to differentiate itself with superior execution quality and transparency. OANDA accepts customers from the U.S., U.K., Singapore, Canada and Australia. They offer an above-average number of products for trading, including currency, commodity and index instruments. They offer more flexibility in lot sizes than typical brokers, which helps to offset the disadvantage of some missing instruments like cryptocurrency and single-stock CFD trading. OANDA was dinged slightly in our review for not providing slippage protection or additional deposit protections beyond the amounts set by regulators. But, pricing transparency, platform technology, regulatory oversight, and a comprehensive product offering (including spread-betting in the U.K. and Ireland) all give OANDA a competitive advantage in the FX market.
pros
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Accounts can be opened with as little as one dollar; no minimum trade size makes it easy to trade and test strategies
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OANDA is regulated by entities including the CFTC, IIROC, FCA, ASIC, and the Monetary Authority of Singapore
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Traders can access 71 currency pairs, 16 stock index CFDs, 8 commodity CFDs, 6 bond CFDs, and 23 metals CFDs
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Traders can use platforms like MetaTrader 4 (demo and funded accounts) or OANDA's custom-built web and desktop trading software
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Investors can trade with a traditional broker-spread or the typically less expensive raw-spread plus commission model
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Traders outside the U.S. can "hedge" positions by holding a long and short simultaneously on a single instrument
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Traders can open and close positions directly from charts in both the OANDA and the MetaTrader 4 desktop applications
cons
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Traders cannot access cryptocurrency or single-stock CFD trading
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We found OANDA's customer service representatives to be good but slow to respond. Hold times were unusually long
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Plenty of education available, including webinars; but the offering was fragmented and disorganized
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Some of OANDA's research and news resources are only available by launching external web pages or applications
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Accounts do not have a negative-balance or slippage protection. This could be a problem in a volatile market
OANDA uses an automated engine to attempt to follow global pricing closely, but spreads are still subject to market volatility and liquidity. The company makes it easy to see current spreads and historical average spreads to make their pricing more transparent. For traders who meet certain account requirements there is a commission plus raw-spread model available, which should be cheaper than regular spreads.
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1.2 Pips
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1.9 Pips
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1.3 Pips
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$0.50
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$10.00
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$0.03
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$0.026
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$0.267
If there's one area where OANDA suffered slightly in our ratings it was with trust. It's worth noting, however, that most of the reason for this was their lack of protection above and beyond what's required by regulators. One could argue that this lack of additional protection is mitigated by their stellar reputation in the industry. (OANDA was awarded highest overall customer satisfaction by Investment Trends magazine.) While we would like to see OANDA take additional steps to protect customer accounts, we applaud their efforts to position themselves as a trusted broker in the space. Vatsa Narasimha, CEO at OANDA, has emphasized the company's position by saying, "We believe the retail trading industry as a whole will benefit from a more transparent approach where brokers are held accountable for making questionable statements or falsely disclosing their interests."
What you need to know
OANDA is registered with the U.S. Commodity Futures Trading Commission (CFTC), the Investment Industry Regulatory Organization of Canada (IIROC), the Financial Conduct Authority in the UK, the Australian Securities and Investment Commission (ASIC), the Monetary Authority of Singapore, and the International Enterprise Singapore. Despite the impressive amount of regulatory oversight, the amount of protection for each account in the event of default is limited and may vary depending on where your account is held.
OANDA offers an impressive array of research and trading tools that are unusual to find in a retail trading platform. It's no surprise, then, that OANDA was awarded multiple "highest customer satisfaction" awards by Investment Trends research. One possible drawback to such a wide array of tools and research is the education and training required to fully take advantage of them. OANDA does offer education and help for most of their tools and features, but it is fragmented and we found it difficult to locate. Because of this, their rating for special features suffered a bit.
What you need to know
OANDA's analysis tools allow traders to test their strategies using common coding languages, visualize market data like the COT report and analyze the effect of economic news directly on charts. We have found the target market for such features tend to be experienced traders who need advanced analytics and resources to deploy, test, and manage their trading strategies in real time.
An overall excellent service, the FXTrade desktop trading platform provides access to OANDA's trading instruments, complex order types and account analytics. The platform includes charts from MultiCharts which offer very advanced studies and display styles. We liked the ability to trade directly from the chart. Other features include watchlists, news feeds, and economic analysis. In addition to OANDA's desktop, mobile, or web apps clients can use the popular MetaTrader-4 (MT4) platform for trading. MT4 includes advanced charting, studies, watchlists and trade automation through "expert advisor" plugins that many traders appreciate. Because the MT4 platform is such a well-known industry standard, traders moving to OANDA from other brokers will be familiar with its functionality. On the downside, the look and feel of the application is a little dated and some functions can be clunky.
Pros
We like the standard navigation in the FXtrade platform. The easy to use menus helped us find our way around the website with ease. The robust charts with integrated news and order entry were a pleasant surprise. Traders have the ability to enter complex order types including buy, sell, and trailing stops. We also noted that position sizes can be smaller than micro-lots (less than .01 of a full-size lot). the overall desktop experience was enjoyable and efficient. As for the MT4 platform, we know that one of the more popular aspects is the ability to add both auto-trading and custom indicators through plugins called "expert advisors" or EAs. The process of adding an EA won't be easy for a novice; but, some sample EAs are included for testing. MT4 also allows investors to trade from the charts and save layouts and chart profiles -- features we've compe to expect and appreciate.
Cons
In a few places, things in FXTrade could feel disjointed. For example, the news, economic analysis, and forums all open as web pages in a separate browser rather than within the platform itself. The advanced charting from MultiCharts are nice, but they can only be opened as a separate window. Likewise, advanced market data and analytics, like OANDA's order book, are opened outside the application. We found that these issues disrupted the overall experience. The MT4 platform has been around for a while and there is no arguing that it looks dated. Audible alerts can be annoying and are difficult to customize. Some common functions like scrolling or zooming on a chart are very "clunky" and will be frustrating for traders familiar with MultiCharts or other modern charting applications. Creating or modifying EAs is also difficult and the programming language is unique and challenging for traders to learn.
The FXTrade mobile trading platform crams an impressive amount of functionality into a small platform. In fact, we found the mobile application to offer similar functionality to the desktop application. Traders can access OANDA's trading instruments, complex order types and account analytics all from their mobile device. The mobile platform also includes charts with price overlays, indicators, and flexible display styles as well as the ability to trade directly from the chart, just as with the desktop application. Other features include news feeds and economic analysis. It was nice to be able to continue our research and trading experience on a mobile platform that felt very similar to our desktop experience.
Pros
As with the desktop application, we like that the standard navigation and easy to use menus created an uncomplicated experience. The same robust charts with integrated order entry helped unify the experience with the desktop application. Complex order types can be entered including buy, sell, and trailing stops. And, unlike the desktop application, we like that the news, economic announcements, and calendars opened inside the app.
Cons
At the time of this writing we were disappointed that that a browser option wasn't available and that fingerprint security was an option only available for iPhone users. Fingerprint security would be a nice addition for Android users as well. Otherwise we were quite pleased with the mobile application. When you find it difficult to list "cons" you know you've found a solid mobile experience.
OANDA's customer support is available 24/7 via email. Live chat and phone support is only available Monday through Friday from 1:00pm to 6:00pm ET. During our tests, we found that OANDA's support was slow and hold times were long. (At one point we waited on hold for 33 minutes.) The available times for chat and phone support were inconvenient and too narrow in our opinion.
What you need to know
Despite slow customer service responses we found OANDA's representatives to be courteous and knowledgeable. The support website also has a good knowledge base and searchable archive that should answer most questions about the trading platforms and order types. But this experience is likely to be inadequate for both very inexperienced and very inexperienced investors. We found the educational resources to be extensive, but they weren't organized and could be difficult to find in a rush.
OANDA ticks all the boxes here as they offer economic analysis, real-time news feeds, calendars, and advanced data analytics. It's a very robust offering, but if we had one gripe it was that things are scattered across OANDA's website and trading platforms. The amount and quality of the resources are above average but investors should expect a learning curve as they try to find everything.
Pros
OANDA provides a very wide range of analytics, research and tools. We found the insights into the behavior of other traders through the Order Book and COT reports particularly interesting. Economic analysis and calendars are comprehensive and include historical trend graphs. For more experienced traders, the pattern matching engines and volatility analysis will be particularly helpful.
Cons
Trading is no longer a solitary task and more and more traders have come to rely on the opinions and insights of other traders. Social traders will find their experience lacking on the OANDA platform. Other than a forum, OANDA doesn't offer any social investing tools. The research and analysis features are comprehensive. But as we've mentioned previously, things tend to be very scattered across OANDA's website and platforms. This can make things difficult to find.
A series of educational videos and articles is available for new and experienced investors alike. Live webinars are also available and cover a wide range of subjects including market analysis, platform education, economic analysis, and Q&A sessions. Minor annoyances include the fact that the images and videos use inconsistent platforms, and some information is out of date compared to current trading platform releases. Not all the education is in a single place and navigation can be difficult.
What you need to know
New investors will need some patience as they try to navigate their way through the introductory education. While we found some of the education for beginners very good, it was poorly organized. Creating a plan and tracking your progress will also be difficult. We couldn't figure out what education we completed and what we should complete next. The good news here is that if you can find your way through the education landscape, what they offer is very good. The OANDA classroom, which is focused mainly on live market analysis, also includes a lot of basic platform navigation and analysis that should help fill the educational gaps. Much of the advanced content was focused on how to use individual tools rather than investing skills.
When compared to the rest of the industry OANDA has a very long history and some solid regulatory oversight that should give investors comfort, despite our middle-of-the-road trust rating. OANDA's primary advantages are cost, transparency, breadth of product offerings, advanced tools, and their trading platforms. It would be very difficult to find a dealer that offers more competitive trading spreads than OANDA -- even across many different trading instruments. Traders who meet certain account balance requirements can further lower their costs by trading a flat commission plus raw-spread structure. Despite OANDA's range of trading instruments, we were surprised that cryptocurrency trading and single stock CFDs were not offered. While helpful when we could reach them we found that customer service was slow. Telephone and chat support were often not as available as we would expect.
John Jagerson has worked in the capital markets and private equity for most of his career, including investing, writing and money management. He currently manages a registered CTA and contributes to Learning Markets, the companion site to the book "Profiting With Forex" by John Jagerson and S. Wade Hansen.
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